Engineering and infrastructure conglomerate Larsen & Toubro (L&T) reported a 15.5% rise in consolidated net profit at Rs 2,948 crore for the quarter ended December, on strong orderbook inflows and execution momentum. However, it missed Street estimates of net profit of Rs 3,246 crore.
The conglomerate had posted a net profit of Rs 2,553 crore for the same period in the previous fiscal. During the reporting quarter, L&T’s consolidated revenue rose 18.8% to Rs 55,128 crore from Rs 46,390 crore recorded during the same period a year ago. Its Ebitda rose 13.5% to Rs 5,759 crore compared to the year-ago quarter, the company said in a statement.
A consensus estimate of Bloomberg analysts expected the firm to post a net profit of Rs 3,246 crore. The company’s revenues and Ebitda also fell below Street estimates of Rs 53,571 crore and Rs 5,985 crore, respectively.
“We have registered yet another quarter of strong performance, despite the headwinds from a volatile global environment and consequent supply chain constraints. Our nine-month order inflow has crossed the FY23 levels,” L&T CMD SN Subrahmanyan said.
“We are currently witnessing improved capex spends in both our primary geographies of India and Middle East. Despite continued global macroeconomic and geopolitical volatility, we remain positive about the investment spends continuing in the medium term,” he added.
During the quarter, L&T won orders worth Rs 75,990 crore at the group level, a 25% rise on year-on-year basis. The firm got orders across businesses such as offshore vertical of hydrocarbon, solar EPC & power transmission, water utilities, buildings and factories and minerals and metals.
The company’s global orders, comprising 67% of the total order inflow, stood at Rs 50,562 crore, it added. The order inflow for the nine months ended December 31 rose 49% to Rs 2.30 trillion on a y-o-y basis, with international orders at Rs 1.38 trillion. As of December 31, the firm’s consolidated order book stood at Rs 4.7 trillion, of which 39% were from global markets.
“Order inflows will slow down in first quarter because of the elections, a new government has to be formed, budgets have to be finalised, so the action will shift to the second half of next year,” L&T CFO R Shankar Raman said in a post-earnings media briefing.
During the quarter, L&T’s infrastructure projects segment secured orders worth Rs 43,208 crore, a 33% yoy growth, while that of energy projects segment rose 47% to Rs 13,281 crore. The hi-tech manufacturing segment secured orders valued at Rs 2,043 crore, up 6%, while the IT & technology services (IT&TS) segment recorded customer revenues of Rs 11,196 crore.
Raman also said that L&T’s operating margin would start improving from the next financial year as the earlier orders, which were won at aggressive prices in 2022-23, will be executed. Further, new orders will start flowing in. “Despite the friction in the Middle East, momentum from Saudi Arabia continues,” he said, L&T would possibly end the year with over 20% plus order flow growth. This is an increase from the earlier guidance of 10-12% for FY24.
Raman termed the Red Sea crisis a matter of concern, due to the importance of the channel for logistics. “Given that it seems to be lingering problem, we have started working on alternate route but it is too early to say the dark clouds have passed. There could be some cost implications, and we are watching the situation,” he added.